"Many possess sufficient balance sheet strength and can use reserves to help navigate short-term instability. Some, such as Mexico, have stepped up structural reforms to improve the responsiveness of their economies."

He sees two issues for investors to closely watch: "How the dedicated investor base will respond to the continued exit of crossover and fast money and whether cyclical economic bumps will undermine the secular upside."

And what does Pimco see happening?

"Our analysis points to the possibility of further technical instability in the short term, along with price overshoots (i.e., movements beyond what is warranted by the underlying fundamentals)," El-Erian writes.

"As such, this period of instability is also likely to offer investors over time attractive entry points into higher-quality emerging market positions. Indeed, and despite the likelihood of further short-term headwinds, we already see isolated pockets of both short- and long-term value."

Retail investors are dumping more of their emerging-market assets than institutional investors, The Wall Street Journal reports.

"[Retail] investors are behaviorally doing the exact opposite of what they should be doing," Steve Blumenthal, CEO of CMG Capital Management Group, told The Journal. "Emerging markets have perhaps the best valuation level of any of the markets, but they're in a sell-off."